Pressure lifts to snap union hold on funds

The Financial Services Council and the federal opposition have stepped up pressure to break the union movement’s grip on the $1.4 trillion superannuation industry.

Recent tensions over the Grocon industrial dispute and representation by the Construction, Forestry, Mining and Energy Union – the union behind the dispute – on the $17 billion Cbus superannuation board have reignited tension over the debate.

The super regulator, the Australian Prudential Regulation Authority, is believed to have raised concerns about at least four super trustees sitting on the boards of multiple major super funds. Three out of the four are union officials. Industry insiders claim the multiple positions present a conflict of interest equivalent to a director sitting on the board of more than one of the big four banks.

Financial Services Council chief executive John Brogden, whose members manage about $1.8 trillion in the superannuation and wealth management industries, has proposed new guidelines to ban multiple, competing directorships.

They want super funds to have a majority of independent directors, independent chairs and compulsory disclosure of how super funds vote.

“Superannuation funds should have the same level of governance and transparency as the companies in which they invest and an abolition of any conflicts of interest," Mr Brogden said. “The industry hasn’t been a cottage industry for a long time and we don’t think equal representation is appropriate any longer, particularly when you have had multiple mergers," Mr Brogden said.

Super trustees who hold more than one board position include Angela Emslie, nominated by the Victorian Employers’ Chamber of Commerce and Industry, who sits on the boards of Vision Super, CareSuper and HESTA. Mick Doust, nominated by the Electrical Trades Union of Australia, sits on the boards of Energy Industry Super and Chifley Financial Services, which provides superannuation among other services. Brian Daley, nominated by the union United Voice, sits on the board of HOSTPLUS and AustralianSuper. And Sue-Anne Burnley, nominated by the Shop, Distributive and Allied Employee’s Association, sits on the boards of REST Industry Super and CareSuper.

The opposition spokesman on superannuation,
Mathias Cormann
, said the FSC standards exposed Superannuation Minister
Bill Shorten
’s ­failure to act. “Bill Shorten has run out of excuses trying to protect his friends in union-dominated industry super funds," Senator Cormann said. However, he failed to commit to abolishing the equal representation system of employer and employee groups for industry superannuation funds.

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And a spokesman for Mr Shorten said the opposition had voted against amendments introduced by the government last month to lift the standard of care for directors and to give APRA greater powers and disclosure of directors’ pay.

“At no point did the Conservatives put forward amendments to this Bill to match their rhetoric. The Coalition’s rhetoric is hollow," the spokesman said.

Australia Institute of Super ­Trustees chief executive Fiona ­Reynolds said there were historical reasons for trustees to hold multiple positions.

“Prior to 2005 when choice of fund was introduced, superannuation funds in the not for profit sector did not ‘compete’ with each other," she said, adding that less than 1 per cent now sit on multiple boards.